Obama’s Carbon Rules Press Other Nations Before Paris Talks

(Bloomberg) — President Barack Obama will issue a sweeping

set of regulations to cut U.S. power-plant emissions, the

biggest carbon-pollution control effort by the world’s biggest

economy that pressures other countries heading into global

climate talks in Paris later this year.

Obama’s Environmental Protection Agency on Monday will

finalize measures that force states and utilities to use less

coal and more wind power, solar and natural gas. The plan,

estimated to cost $8.4 billion, is expected to go into effect in

the next month or two but is likely to face a legal challenge

that could stall its implementation.

Taken with other measures to curb methane emissions, spur

private companies to use more renewable power and curtail the

use of climate-warming refrigerants, the measure will transform

how electricity has been produced in the U.S. for a century. It

puts the U.S. on the path to cut emissions by 26 percent to 28

percent by 2025, according to the White House. With the U.S.

moving, others may be more likely to follow, analysts say.

This “indicates that the world’s largest economy is

providing big regulatory incentives for clean energy and

penalizing fossil fuels,” said Paul Bledsoe, an energy expert

at the German Marshall Fund who served in President Bill

Clinton’s administration. “It’s that basic underlying economic

signal that tells governments around the world that it’s time to

act.”

Largest Emitter

The U.S., the world’s largest emitter of carbon dioxide

before China supplanted it in recent years, has never

implemented a global agreement to combat climate change.

Negotiators from 195 countries are working on a deal that will

bring about meaningful cuts by rich nations and the first caps

from countries such as China. Getting all the nations to agree

is one of the top priorities of the last 18 months of Obama’s

tenure.

“It’s time for America, and the world, to act on climate

change,” Obama said in a video message released on the White

House Twitter feed.

The EPA plan is the centerpiece of Obama’s climate plan,

and a year after it was first proposed it’s set to be released

Monday. Obama will introduce it at a White House ceremony.

‘Special Interests’

“For too long we’ve seen Washington, D.C., putting off and

delaying serious action” on climate change,’’ White House

spokesman Josh Earnest said in an interview on MSNBC Monday. “I

have no doubt that special interests in Washington, D.C., are

going to squeal, as are the politicians who are in their

pocket.”

The regulations are to take effect after publication in the

Federal Register, but they may be stalled if opponents ask for

stay while challenging in court.

According to documents released in advance, the final rule

aims to accomplish a 32 percent reduction in carbon emissions

from the nation’s power plants by 2030, compared with 2005

levels, against 30 percent in the EPA’s original 2014 proposal.

Emissions are already down 15 percent from that peak.

The plan will accomplish the rest in part by giving states

credit for solar or wind projects that break ground in the next

few years, before the rule takes effect in 2022. It will also

force utilities to run natural-gas plants more or encourage

customers to use less electricity.

Power generation, specifically burning coal to make

electricity, is the biggest source of carbon pollution in the

U.S. Until now there was no cap on those emissions.

Clean Energy

“The way electricity is being produced is being

significantly transformed,” said Michael Brune, president of

the Sierra Club. “It will amount to a move away from fossil

fuels toward clean energy.”

Power plants burning coal produce almost 40 percent of the

nation’s electricity, down from about half just a few years ago.

That’s forecast to decline to 27 percent by 2030 under these new

rules.

The general EPA plan is a set of targets for states. Each

will have to submit plans to the agency by 2018 — two years

later than called for in last year’s draft — on how it will

achieve the EPA-mandated goal. The targets will phase in between

2022 and 2030.

The EPA’s initial proposal would have forced states with a

lot of natural-gas plants, such as Arizona, to make cuts in

emissions of more than 50 percent by 2030. Meanwhile, coal-heavy

states including Kentucky, West Virginia, Wyoming and Montana

faced cuts of 21 percent or less.

Uniform Goals

The EPA tweaked its forecasts for the amount of natural-gas

and renewable-energy growth it estimates can be accomplished in

those states.

“At the end of the day, you will see state goals more

uniform,” said Brian Deese, a White House adviser on energy and

climate.

The White House says that while it’s backing off on an

initial deadline for the rule and making other changes to help

states, the final plan will lead to more reductions in

greenhouse gases because it will boost carbon-free energy and

rely less on switching from coal to natural gas. The incentive

plan will also reward states that submit plans to the White

House early.

“In today’s marketplace their best compliance option is

clearly solar,” Rick Umoff, counsel for the Washington-based

Solar Energy Industries Association, said in an e-mail. A more

flexible timeline under the plan “will only further encourage

states to act early so they can take advantage of the booming

solar economy and any compliance incentives that the EPA might

offer.”

Democratic presidential candidate Hillary Clinton said the

plan is “a significant step forward” in meeting the threat of

climate change.

Legal Challenges

Coal producers are not as happy.

“EPA’s final Clean Power Plan reflects political

expediency, not reality for supplying the nation with low cost

reliable power,” said Hal Quinn, president of the National

Mining Association. On Monday, the group will file a stay to try

to stop the plan from going into effect, he said.

The regulation is also expected to face lawsuits from coal-dependent states, coal producers and some utilities or power

cooperatives. They argue that the EPA is exceeding its authority

and forcing a reorganization of power generation for which it

doesn’t have the legal mandate.

Those legal challenges may mean the rule never takes

effect, Senate Majority Leader Mitch McConnell, a Kentucky

Republican, warned the U.S. negotiating partners earlier this

year.

“Even if the job-killing and likely illegal Clean Power

Plan were fully implemented, the United States could not meet

the targets laid out in this proposed new plan,” he said in a

statement March 31. “Our international partners should proceed

with caution before entering into a binding, unattainable

deal.”

To contact the reporters on this story:

Mark Drajem in Washington at

mdrajem@bloomberg.net;

Alex Nussbaum in New York at

anussbaum1@bloomberg.net

To contact the editors responsible for this story:

Jon Morgan at

jmorgan97@bloomberg.net

Elizabeth Wasserman, Steve Geimann

About BloombergNEF

BloombergNEF (BNEF), Bloomberg’s primary research service, covers clean energy, advanced transport, digital industry, innovative materials and commodities. We help corporate strategy, finance and policy professionals navigate change and generate opportunities.

Available online, on mobile and on the Terminal, BNEF is powered by Bloomberg’s global network of 19,000 employees in 176 locations, reporting 5,000 news stories a day.
 
Sign up for our free weekly newsletter →

Want to learn how we help our clients put it all together? Contact us